May 15 2006 Employment Law Enews

Welcome to the latest edition of employment law enews.

Repayment Clauses in Compromise Agreements Not Always Valid

The recent decision by the Court of Appeal in the case of CMC Group v Zhang casts doubt on the enforceability of 'repayment clauses' commonly contained in compromise agreements.

In the case in question, Mr Zhang signed an agreement settling his claim against CMC for $40,000. The agreement contained a clause stating that the full $40,000 would be 'immediately repayable' if Mr Zhang broke any of the terms contained in the agreement.

CMC subsequently alleged that Mr Zhang had broken his side of the deal (claiming that he had breached the non-harassment / non-derogatory remarks provisions) and sought to recover the $40,000 through legal proceedings. CMC successfully obtained a default judgment against Mr Zhang, with damages to be assessed. Mr Zhang appealed.

In his appeal, Mr Zhang argued that the repayment provisions amounted to a 'penalty clause', which as such would not be enforceable under English contract law. The Court of Appeal found that a fixed level of damages for breach of the agreement was potentially excessive as the damages actually suffered by CMC may in reality be nominal. It was as such, they said, a penalty clause and whilst CMC may bring a claim for damages it could not automatically recover the $30,000.

Whilst the Court of Appeal has granted CMC permission to appeal to the House of Lords, if the finding that such a repayment clause is a penalty, the ability of employers to recover ex gratia payments from employees in breach of compromise agreements will no longer be automatic or indeed possible without showing damage.

House of Lords Dismiss Rutherford 'Age Discrimination' Appeal

The House of Lords last week dismissed the appeal by Mr Rutherford in Rutherford v DTI (previously Harvest Town Circle).

The brief facts of the case were that Mr Rutherford was aged over 65 at the time of his dismissal, and was accordingly barred from bringing unfair dismissal proceedings as a result of the upper qualifying age imposed by section 109 of the Employment Rights Act 1996.

On appeal through the Court of Appeal and ultimately to the House of Lords, Mr Rutherford claimed that this upper limit in fact amounted to indirect sex discrimination as it had an adverse affect on a higher proportion of men than women, as more men wanted to work beyond the 65 upper age threshold.

Whilst the five different Law Lords gave different reasoning the thrust of their decision was based on the belief that Mr Rutherford had used the wrong pool of people when arguing that the limit had an adverse affect on a higher proportion of males, suggesting that the impact of the limit should have been judged when considered in light of its affect on the UK workforce as a whole.

With the Employment Equality (Age) Regulations 2006 set for introduction in October this year, the upper age limit for claiming unfair dismissal will be removed and those over 65 will be free to claim unfair dismissal. steeles are hosting a number of seminars, workshops and briefings in preparation for the introduction of the Regulations, for further information please see details of the different options outlined below.

Age Discrimination Breakfast Briefing, Norwich

Due to these regulations coming into force, steeles' employment law team are hosting a breakfast briefing cover the essential aspects of age discrimination in order to equip you to take steps now in preparation for October 2006.

We will review the main aspects of the age discrimination legislation as it affects the following:

• What is Age Discrimination?
• How will Age Discrimination affect the Recruitment and Selection of Employees?
• How can we ensure that our Terms of Employment are not Successfully Challenged under the Age Discrimination Legislation?
• When will a Retirement Dismissal be Fair?

This briefing will take place on Wednesday 7 June at Norwich City Football Club. Cost is £40.00 + VAT and includes a full english and continental breakfast. To book your place please call 01603 598000 or book online.

Pensions Law Workshop 13 June 2006

The Impact on Pensions of the New Age Discrimination Regulations - Breakfast Briefing

8.45am for 9:00am start and 10:30am finish
steeles London Offices, Bedford House, 21a John Street, London WC1N 2BF

Today more than ever before pensions are featuring at the centre of concerns about employment. Together with barrister Fenner Moeran we are offering a one and a half hour workshop focusing on the pensions impact of the Regulations. The workshop is aimed at HR Managers and those with responsibility for pension issues in the workplace.

In particular the workshop will focus on the Regulations' impact on:

• Provision of pension benefits;
• Final salary -v- Money purchase benefits;
• Contribution rates;
• Scheme retirement ages;
• Trustees of occupational pension schemes.

The cost of the workshop is £25.00 plus VAT. To book your place please call 01603 598000 or book online.

Temporary Workers: The Legal, Financial and Practical Position

Tuesday 6 June 2006, registration at 8.45am for 9.15am start and 11.30am finish.

@ EEF Broadway House, Tothill Street, Westminster, London SW1H 9NQ

In association with Pure Recruitment and Wilder Coe Accountants, steeles are hosting a seminar concentrating on the legal, financial and practical implications of recruiting temporary workers. In particular, the seminar will consider:

• The advantages and disadvantages of engaging temporary workers;
• The legal status and rights of such workers; and
• The tax implications for both employer and worker.

This seminar is free to attend although places are limited and will be allocated on a first come first served basis. We expect this event to be popular so I recommend that you book your free place as soon as possible. Light refreshments will be served. To book your place please call 01603 598000 or book online.

This article copyright © 2006 Steeles Law llp. All rights reserved.